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Paying with attention

By Rafe Needleman
Red Herring
March 19, 2001

Roy de Souza, CEO of Zedo, has a good idea, but bad timing. Zedo's services increase the effectiveness and performance of online advertisements. Unfortunately, the very foundation of online advertising is currently out of favor. If your crystal ball says not to write off Web ads just yet, you should know about Zedo. If not, skip today's column.

Zedo has two main elements. First is the serving model: Zedo uses the Akamai network to serve images, so the company's cost structure is lower than DoubleClick's, which supports its own server network.

The bigger difference is that Zedo's servers don't perform the work of targeting specific ads to particular users. Instead, users select an advertising "channel" (like Automobiles or Entertainment) on the sites they visit -- the system can even be set so a user must choose a channel to get the selection menu to close. Roy says Zedo makes users more receptive to the advertisements, and that his targeting is more accurate. Potential customers are services with a wide range of users: Web-based email and general news sites, for example. Highly targeted sites don't have the broad ad mix to exploit the service.

The startup has raised $2.25 million in one round.